Study Of The Accounting Measurement Of Derivative Financial Instruments

In the late 1980s, financial innovations in a surprisedly development swept the entire international financial market, and its derivatives, which are different from traditional instruments, became the most important part of modern financial market. Financial instruments are risk diversification instruments, nevertheless, they are big sources of risks too. How to set up the supervision & management systems for accounting practices including financial derivatives is international focus.From International Accounting Standards Commission(IASC) to the authorities for accounting principles in each nation to the academy, they are doing their best to identify, to measure, to report financial derivatives, fortunately with never-ending new approaches being contributed to the frame of accounting principles. On December 17, 2003, International Accounting Standards Boards (IASB) amend new principals, furthermore to make sure the model of fair-value measurement for financial derivatives is generally implemented.On February 15th, 2006, Finance of Ministry People's Republic of China issued a recently revised Principals of Accounting in corporation. The new principals stipulate the procedures of recognition, measurement and disclosure of financial derivatives. Furthermore, it highlights the 'fair-value' is the only way of financial derivatives measurement. The debut of the new principals is a landmark in the history of accounting in china. The article compared the differences between the original and the revised accounting system on financial derivatives, and analyzed the influence caused by the implement of the new principals on financial derivatives from empirical analysis. At last ,the article give some advice on how to launch measurements accordingly.